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BANKS v. CHAS. KURZ CO.

November 18, 1946

BANKS et al.
v.
CHAS. KURZ CO. et al.



The opinion of the court was delivered by: KALODNER

This is a libel for charter hire and damages arising out of the capsizing, in Philadelphia port waters, of two of the libellants' scows, the 'Winchester' and the 'B. & O.,' while engaged in a service arranged for by the respondent, Chas. Kurz Co. The latter impleaded the Independent Pier Company, a stevedoring organization, but upon conclusion of the trial the action against it was dismissed for lack of evidence.

Three major issues on the merits are presented, first, the rule of the respondent in its dealings with the libellants, that is whether agent or principal; second, the character of the hire agreement; assuming the determination of these issues in favor of the libellants, third, the liability of the respondent for the damage to the lighters. The latter issue involves questions of seaworthiness and negligence.

 There are two preliminary questions raised by the respondent: One on a motion to strike certain matters from the libel, and the other by objection in the course of the trial to the introduction in evidence of two letters.

 Respondent's motion to strike from the libel is predicated on Rule 12(f) of the Federal Rules of Civil Procedure, 28 U.S.C.A.following Section 723c, and is directed at paragraphs six and thirteen of the libel, which declare that on January 5, 1945, the libellants, in two letters, demanded that the respondent fulfill its obligations under the alleged charter, raise the two scows, repair and redeliver them in the good order and condition as when received. Copies of these letters were attached as exhibits. Because of additional material contained in the letters, the respondent, in its motion, seeks to have the two paragraphs of the libel and the letters expunged from the record on the ground that the letters are self-serving declarations and immaterial.

 Of course, the Rules of Civil Procedure have no application in admiralty causes. Rule 81(a). Nevertheless, overlooking technical phraseology, the motion may be treated as stating an exception to the libel under Rule 35 of the Admiralty Rules, 28 U.S.C.A.following Section 723. See 2 Benedict on Admiralty, 6th Ed. 1940, p. 56.

 An examination of the record papers herein, however, discloses that the libel was filed on August 22, 1945; that service was accepted on September 10, 1945, and filed on September 12, 1945; and that the 'motion to strike' was filed on October 1, 1945. Rule VII of the Local Rules in Admiralty of the Eastern District of Pennsylvania provides that 'All exceptions to the pleadings shall be filed within 10 days after the service thereof unless, upon cause shown, the court shall otherwise order.' There being no court order to the contrary, respondent's motion, albeit considered as an exception under the Admiralty rules, is late and must be denied.

 In the course of trial, the libellants sought to introduce in evidence the two unanswered letters of January 5, 1945. The respondent objected on the ground that they were self-serving declarations. I am of the opinion that the objection is sound. Since the letters were also offered to prove a demand upon the respondent to raise and repair the scows, and such demand was, in any case, admitted, the letters may be considered as evidence for that purpose alone.

 On the merits, the libellants contend that the respondent engaged the two scows under a bare boat charter or demise; therefore, it is sufficient to show delivery of the vessels in good condition and the failure to return them in like good condition, reasonable wear and tear excepted. The respondent asserts that it is not liable since it arranged for the scows as agent for a disclosed principal, and in any event, the charter agreement constituted a contract of affreightment. Further, respondent denies liability on the ground that the scows were unseaworthy at the time of delivery.

 The charter involved herein was an oral agreement made by H. C. Bennett, manager of the Chas. Kurz Co., respondent, with Captain Charles T. Banks, a partner in the libellant company, on December 28, 1944. Evidence concerning the numerous subsequent telephone conversations between the two men, and related matters, will be considered when pertinent.

 On the agency issue, Captain Banks testified that prior to the transaction here in controversy he never had business dealings with the Chas. Kurz Co.; that he did not know who 'they were'; that when Bennett first called him on the telephone on December 28, 1944, he identified himself merely as the representative of Chas. Kurz Co.; that at no time during that or the later telephone conversations was he informed that the Chas. Kurz Co. were ships agents or agents for the War Shipping Administration. Banks further testified that Bennett told him he had heard that Banks had scows available and that he wanted them for the purpose of removing slag ballast from the 'S.S. Memnon,' docked at Pier 98 South, bulkhead berth, but that he, Banks, did not know that the 'S.S. Memnon' was a War Shipping Administration vessel, nor did he make inquiries concerning it.

 One Harry Seegar, at the time assistant port operations manager for the War Shipping Administration, testified that on the morning of December 27th or 28th, he telephoned the Banks Towing Line, said he was from the War Shipping Administration, and inquired about lighters, and was informed that lighters were available. Seegar also testified that he then said the War Shipping Administration had no authority to order lighters, but that Chas. Kurz would call, but he did not state who Chas. Kurz was. However, Seegar did not know to whom he had spoken, and at the time of the trial could not say that he had talked to Captain Banks. Captain Banks could not recall having talked to Seegar, nor did he know who Seegar was.

 Bennett testified that as a result of a conversation with Seegar, he telephoned the Banks Line at about 10:30 A.M. on December 28, 1944, and spoke to Captain Banks. He said he told Banks that he was from Chas. Kurz Co., agents for the War Shipping Administration, that he had talked to Seegar and was advised that Banks had lighters available.

 This comprises all of the evidence on this phase of the controversy. I fully credit the testimony of Captain Banks to the effect that Bennett identified himself only as representing the Chas. Kurz Co. Since Seegar could not say that he spoke to Captain Banks personally, or to one whose knowledge may be imputed to Banks, I conclude that Banks contracted with Bennett as agent for the Chas. Kurz Co. That Banks knew, or should have known, that the Kurz Co. was a ships' agent is immaterial, for its liability is the same here whether it contracted as a principal, or on behalf of an undisclosed principal -- in either case, it is a party to the contract. Restatement, Agency, Section 321 and 322; Lewis v. United States Navigation Co., Inc., D.C.S.D.N.Y., 1944, 57 F.Supp. 652, 655; Dorsey v. Martin, D.C.E.D. Pa., 1945, 58 F.Supp. 722, 723.

 The second issue raised by the respondent as affecting its liability relates to the nature of the charter. The arrangement was made over the telephone and, as may be expected, the parties offered contradictory evidence as to what was said.

 According to Captain Banks, in the course of the telephone conversation with Bennett on the morning of December 28, 1944, Bennett told Banks he required lighters to remove slag ballast from the 'S.S. Memnon.' On being told that lighters were available, Bennett asked for their dimensions and capacity, and the hire charges per hour. Banks said that the rate was $ 15 per day for each boat without a man, or $ 25 per day with a man. Bennett asked what the difference was, and Banks replied that it was in the hire of the man. Banks also told Bennett that under his insurance agreement it was necessary to have a man on board. Bennett said he did not need men as he had plenty to care for the lighters. Banks was also to tow the lighters on Bennett's instructions, and it was agreed that Banks would have the 'Winchester' alongside the 'S.S. Memnon# for a 7 A.M. start the next morning.

 Banks further testified that the term 'bareboat charter' was not used, but because the lighters were to go without captains he understood that Bennett was taking the boats under such a charter, to return them in the same condition as received, reasonable wear and tear excepted.

 According to Bennett, after Banks affirmed the fact that he had available lighters and that they were equipped to carry slag ballast, he inquired about the price. Banks quoted $ 15 per day. Bennett then said he would call back later to let him know whether he wanted the lighters. During this conversation also, Bennett told Banks he would need the lighters for about a week or ten days. The uncertainty was a result of the fact that Bennett did not know where he was going to put the slag ballast, but he did not wish to store it for any length of time.

 After having a conversation with a Mr. Carr, Bennett called Banks again at about 2 P.M. on the same day. The purpose of the call, Bennett testified, was to find out whether men would be on the lighters. In response to Bennett's question, Banks said that he could not furnish men. Bennett then asked whether Banks thought it 'O.K.' to load the lighters without a man on board; Banks replied that they had been operating without men 'up to now' and he did not see why that could not continue. During this conversation arrangements were made for banks to deliver the 'Winchester' alongside the 'S.S. Memnon' for a 7 A.M. start the next morning. Bennett said he would let Banks know later about the second lighter.

 Bennett further testified that there was no mention of the term 'bareboat charter,' that he did not understand that he took the lighters under a bareboat charter, and that he took them 'the same as I would take them from anyone else.' He assumed Banks would care for his own property. Also, Banks was not to have any part in supervising the loading and unloading of the scows, but was to tow them on his, Bennett's, instructions.

 Charles F. Carr, superintendent of stevedores for the Independent Pier Company, the impleaded respondent, testified that before starting to discharge ballast to the lighters, Bennett told him he had obtained two lighters from Banks. Carr knew that Banks at times sent lighters without captains aboard and he asked Bennett if he had captains aboard; Bennett said no, but he would have a man on board. Carr also stated that no man was aboard either lighter during the loading with slag ballast.

 On December 29, 1944, Bennett ordered the second lighter, the 'B. & O.'

 This evidence establishes the charter party. The question as to the legal effect thereof is one frequently raised is admiralty cases, particularly where the transaction is oral. Here is highlighted the 'grand division' in charter parties: the demise, on the one hand, and the contract of affreightment, on the other. Robinson on Admiralty (1939) 594. The practical difference is readily apparent: In the one instance, the shipowner turns over his vessel -- lets it out -- to the charterer; in the other, he agrees, in essence, to transport goods. The legal effect of a demise is to put the parties, as between themselves, in the position of bailor and bailee of the vessel; the legal effect of a contract of affreightment obviously is to put the parties in the position of shipper and carrier of goods. In final legal analysis, it is well-settled, whether the charter constitutes a demise depends upon whether the ...


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